The Philanthropist published this article, which is the second in a series of three about the Personal Philanthropy Project, in two consecutive issues. Part 1 explored the results of the Project’s online survey.

Imagine Canada’s Personal Philanthropy Project aims to build stronger communities through philanthropy. It has been conducting quantitative and qualitative research to investigate the charitable giving attitudes and behaviours of affluent Canadians. In the first installment in this series, we looked at which Canadians give more to charitable causes as a percentage of their annual income. In Part 1 of this second installment, we unpacked the findings of a study that assessed the discretionary spending habits of 2027 affluent Canadians.

In Part 2, we’ll look at how we can ensure increased, and more informed, giving among this group of Canadians by encouraging personal finance professionals to incorporate discussions about charitable giving into their work.

Focus groups

As part of the Personal Philanthropy Project, researchers facilitated focus groups across the country between April 2016 and January 2017. They conducted this qualitative research with personal finance professionals (PFPs) consisting of, but not limited to, financial planners, financial advisors, investment advisors, estate lawyers, and tax accountants. A series of 10 focus groups engaged four major banking institutions and 77 PFP participants from Vancouver, Calgary, Mississauga, Toronto, Ottawa, and Montreal.

This “Systematic Approach” proposes to mobilize PFPs to significantly elevate philanthropic discussions with affluent Canadians, and ultimately increase personal charitable giving. The focus groups investigated the extent to which those in wealth-advising positions can advise their clients to think about, and plan for, charitable giving. By engaging these professionals to identify means, processes, and/or products, these sessions examined the possibility for PFPs to be an effective lever in promoting more informed and higher giving levels. Focus groups explored how to support and encourage values-based conversations; how to help grow the advisor-client relationship; and how to build a more intentional culture around philanthropy, leading to increased charitable donations. This research illustrates how this could be yet another untapped resource – and in this case, an untapped opportunity.

Giving behaviour

All PFPs agreed that there is nothing “average” about today’s clients, noting that most don’t readily raise the issue of philanthropy. When the topic does come up, it tends to be in discussions around tax benefits or estate planning, which focus mainly on end-of-life giving (wills, bequests, etc.) rather than annual giving. Most PFPs reported a limited understanding and knowledge of their clients’ philanthropic activity and annual giving, and many noted that their client base’s annual giving varies widely, is “ad hoc,” and, for the most part, does not form part of their financial planning. As client net worth and professional advancement increases, the incidence and amount of charitable giving tends to also increase, though PFPs still believe that most of their clients can afford to donate more than they now give. Many said that giving depends greatly on their clients’ life stage: even the wealthiest worry about running out of money. Some did suggest, however, that it is up to advisors to show their clients how they can give. Some PFPs noted that some of their clients volunteer their time to organizations such as Doctors Without Borders rather than making financial contributions – these individuals feel that time is their gift. While some PFPs speak to clients about charitable giving, they see it more as a way of strengthening the client relationship. The parameters for these discussions are somewhat limited and do not generally extend to guiding donation amounts.

Overall, the perception and assessment of most PFPs regarding their clients’ giving behaviour tends to reflect the patterns of giving identified in the proprietary research Imagine Canada conducted with affluent Canadians in 2015. Giving is primarily driven by personal connections to charitable causes; most give to one or two organizations that they support on a regular basis with a handful of smaller, unplanned donations going to other causes in response to requests or need; very few have any formal plan for annual giving; and the majority do not consider annual giving as part of financial planning.

Broaching the topic

PFPs thought that initial meetings with clients might be an appropriate time to raise the topic of charitable giving and philanthropic issues, either by formal process or as the opportunity presents itself, depending on the practice in place. Many think the topic of philanthropy fits well in discussions about the development of a comprehensive financial plan or budget. While they said many clients do not seek direction on where, or how much, to be giving to charity, they do ask about how they can make their donations in the most effective way. PFPs also said donors who make large gifts do not make their donation decisions lightly, and most clients are open to receiving advice. A significant number of PFPs suggested that advisors need to clearly demonstrate – and not just indicate – the financial impact and benefits of giving. They should be able to confidently coach individuals about the availability of surplus income and capital. This means PFPs must understand the strategic value in having these conversations with clients and be equipped to ask the right questions to advance their clients’ philanthropic interests and goals.

Perceived benefits

Participants reported that discussions about philanthropic activity often increase as the relationship grows and clients become more comfortable discussing a range of issues. Many see them as a way of strengthening the client-advisor bond, noting that they work in a competitive business so these discussions allow PFPs to better understand their clients’ needs, provide a “full service” offering, and strengthen trust. Clients who are interested in philanthropy often look for meaningful ways to link their values to charities, while PFPs are looking for the best ways to help clients manage their affairs and plan for the future. If PFPs take a holistic approach that includes discussion about charitable giving, their clients get more services in one place. For a PFP, this further differentiates them from other service providers. Having philanthropic conversations, then, might prove to be smart business.

While PFPs expressed varying degrees of discomfort about raising the issue of charitable giving with clients, mostly as it relates to contribution levels, many see value in broaching the topic in some way, stating that discussions do not need to be awkward. Some suggested approaching philanthropy within the context of overall wealth management: if clients think of giving as simply coming from income, it is more of a transactional type of business. However, the groups noted the importance of differentiating between managing money and engaging in a wealth-based planning process for giving, suggesting that too much charitable activity is spontaneous. The process should be deeper and more consistent.

Most PFPs asserted that, given we have an increasingly aging population, conversations about the management of significant wealth sums and wealth transfer will become more frequent. As a result, the frequency of opportunities to discuss charitable giving with clients will also increase, providing a potential win-win opportunity.

Perceived limitations

A small number of PFPs across all sessions raised concerns about the possible risks associated with broaching philanthropic and charitable giving issues with clients. The most consistent reason for this is the likelihood of reduced assets under their portfolio management, which is a deterrent. Most PFPs who were in favour of having discussions about charitable giving seemed to accept that there would be no monetary gain, but some did suggest that it could help build their businesses.

Based on current practice, many PFPs identified that accountants and estate lawyers might have a greater influence over charitable giving than other types of wealth advisors given the nature of their relationship with clients. Some worried that clients would feel they are being preached to, thus becoming defensive about discussing giving in general, running the risk for PFPs of overstepping their professional boundaries. A fair number suggested that pushing too far or being too invasive could turn a client off – that, if anything, conversations should centre around their clients’ goals and objectives, and not be solely about products. Others recommended practices that could enable the advisor to remain involved with client assets in a way that generates revenue, such as in foundations and donor-advised funds, which could potentially remove barriers to raising this topic. It is worth noting that, with few exceptions, PFPs had little awareness of these types of financial products and programs. While most demonstrated a general understanding of basic tax implications, there was also a relatively wide knowledge gap on matters dealing with the purpose and benefits of private foundations; the use of donor-advised funds; services offered by community foundations; and the role of specialist consultants. That said, all participants expressed a keen interest in usable information in these areas, including success stories that they could integrate into conversations with clients.

In most sessions, PFPs noted how much Canadians pay in taxes, with many indicating that tax levels are higher in Canada than in any other country, including the United States. They tend to believe that tax dollars should deal with most social and cultural issues and they think their clients probably agree. As a result, many felt that Canadians, and more specifically their clients, might not feel any urgency to give to charity. Additionally, some participants in every session noted the “questionable” efficiency of charitable organizations. Many reported they are uncertain about properly assessing a charity as it relates to administrative costs and distribution of funds. This means they are unable to provide guidance about this to their clients. They felt a way to gauge effective charitable organizations would be beneficial, with some requesting a guide to recommended charities. While these issues might seem somewhat tangential, several PFPs expected that their clients would have similar concerns and questions that would influence their openness to making increased charitable donations.

Consistently, PFPs said that the limited flow of information about charitable giving and a lack of direction from employers contribute to the lack of interaction with clients relating to philanthropic issues. Many are willing to have these discussions with new and current clients providing that they receive accessible and relevant resources, training, and information so they can discuss the topic with confidence.

Guided giving levels

Facilitators asked focus group participants to weigh in on their awareness of any means available to inform charitable giving levels, and they shared the four “Standardized Approaches” (Benoit, 2017) as examples. PFPs had limited or no knowledge of any such mechanisms and most reported that their charitable giving discussions typically did not include any recommendations on giving amounts, particularly annual amounts. Those who were most unreceptive to the idea of using such tools had trouble visualizing how they could implement them into their daily practice. Other participants noted that if an individual has no benchmark and no one in their circles gives to charity or talks about it, then they would not know how much they should be donating. Others said that many of their clients are interested in how they compare to their peers: who do they give to? How do they do it? What annual amounts do they give? Those PFPs said a guideline tool could be helpful and prompt clients to increase their annual giving.

Most participants cautioned against judging clients, and worried that these approaches could lead to “shaming” or be “guilt-inducing.” They said it is important for any strategy to be objective and grounded in fact. Many PFPs agreed that making charitable giving information available on a company’s website or a publicly accessible website could be an unobtrusive way to provide guidance. It would also be a starting point to engage clients in the conversation. Some recommended that the use of giving percentages or any of the other approaches would be more effective coming from a third-party resource, such as an article. Their clients would receive this as “just information” rather than a prescription. PFPs expressed strong support in most sessions for making information available to the general public about giving as a percentage of income.

Information and education

One theme that resonated at all group sessions was the indisputable need for educational and informational resources to increase public awareness about charitable giving issues. Most PFPs conceded that their clients might consider increasing their charitable giving if they had a better understanding about Canadian giving statistics. Many said their clientele could be uncertain about where to direct donations; how to make them; and how they can potentially benefit from making them. A number of PFPs affirmed that they would be more likely to engage in conversations about charitable giving if they had the appropriate knowledge. Many proposed that advisor education in this area – through learning by way of training, presentations, and a national business conference – would give them a competitive edge and help keep philanthropy top-of-mind, as well as provide support in the effort to increase donations.

Thus, getting this information to PFPs, and through them to their clients, would be advantageous for the charitable sector and those it serves. PFPs suggested this could include information, data, and stats about charitable activity and the charitable sector – via websites, one-page documents, articles, newsletters, or pamphlets that include case scenarios profiling prominent donor activity and peer philanthropy. Some PFPs even suggested a resource that links a client’s values to like-minded charities. It could include associated planning questions to help facilitate a conversation. Some PFPs said that once clients determine what charitable causes resonate with them, donation amount becomes less of a focus because they want to make a difference.

Looking ahead

Reflecting back on Part 1 and Jeff Bezos’ public request for philanthropic ideas begs the question about whether or not we are looking at personal giving in our day from the right angle, especially as it relates to those who have an increased capacity to give – not just the uber-wealthy, but those who are better-off than the average Canadian. Make no mistake: giving back, in any way and at any level, matters and makes a difference. And with all assumptions aside, one would hope that this is the start of a philanthropic reconnaissance mission of sorts for this business mogul.

Granted, when it comes to finances, Bezos is in a league of his own. But regardless of financial status and whether one is considering philanthropy in the “here and now” or the longer term, have we missed an opportunity that can be leveraged through the giving process itself? And taking that question north of the 49th parallel, is there a chance to model a more deliberate approach towards contributing to the fabric and health of Canadian communities?

With our research findings illuminating the giving potential in this country, Imagine Canada believes that there is. The opportunity exists to create a movement around a new social norm for giving – one that would inspire increased charitable donations and have a positive impact on Canadian society. Armed with this and other research insights, the Personal Philanthropy Project is now moving from research into an action phase. Imagine Canada will soon be sharing the project’s action plan in a final article in this series, further outlining how we will use the findings from this project.

“One of the most important things that I have learned,” said Mike DeWine, a US lawyer and politician, “is that life is all about choices. On every journey you take, you face choices. At every fork in the road, you make a choice. And it is those decisions that shape our lives.”

It would seem that Canadians have a choice to make. As the road diverges, let’s hope they make the right one.

Please stay tuned as we share one more article that outlines next steps for the Project in the coming months: the final piece in this series published in The Philanthropist. We will be updating our website with relevant Project research, information, and data as it becomes available, in both French and English.

Michèle Benoit is Manager of the Personal Philanthropy Project at Imagine Canada and brings her leadership experience in project management from the corporate, public, and private sectors to carry out this important national initiative.